Taking Lots of Small Steps

Shoe department at Gallery Lafayette Paris 2009

I have just read the article by columnist Chanticleer on page 64 of the Australian Financial Review (Thursday 18 March 2010) talking about the strong results of the Australian specialist high-end retailer David Jones Limited – which is the Australian woman’s little slice of Paris.

David Jones Limited – or as it affectionately known in Australia - “DJs” – has sparked a minor rally on the Australian Stock Exchange by returning a global best practice 40 percent gross margin on its sales revenue of Australian dollar 1.086 billion in revenue for the half year to December 2009.  It will pay an interim dividend of 12 cents on May 3^rd.  Naturally this sparked a rally on its shares – which flowed over into the general market.

This is an awesome result in the context of the Global Financial Crisis.  I wonder how many global fashion retailers have achieved similar results over the last 6 months?  The general reporting suggests that the market for discretionary fashion goods has been stagnant.

How did Chief Executive Officer Mark McInnes and Chief Financial Officer Stephen Goddard achieve this outcome? 

As Chanticleer points out; by taking lots of small steps. 

McInnes and Goddard achieved this result by focussing on the small things:

• ·      By constant attention to removing costs (through 58 separate cost reduction projects they reduced cost by 0.3 % in the 6 months).
• ·      Persistent striving to better supplier relationships (including a line by line review of their day to day banking arrangements).

Through this focus on incremental small steps – they have achieved a global  best practice result. 

Chanticleer adds that DJ’s has never lost its focus on its core value proposition – to appeal to women and to attracting them back for repeat purchases – rather than on new customer acquisition.

Whatever your goal, you can achieve great outcomes by focusing on the details and taking lots of small steps.

Management Matters in Australia

For some who have asked me - here is the link  Australian Government paper "Management Matters" to the paper released by the Australian Government in November 2009 called "Management Matters".  It has some disappointing  findings - on most criteria against global benchmarks - Australia has average performance  at best from its management pool.  I will also post the file on my LinkedIn page. 

The Exceptional Performance Formula

I was fortunate today to participate in a leadership training workshop facilitated by rogenSi IP Limited in Sydney Australia.  It was one of the best training sessions I have attended in many years.  I was particularly struck by the Exceptional Performance formula:

EP = (K+S+P) x M

where

EP = Exceptional Performance
K  =  Knowledge
S  =  Skill
P  =  Process
M = Mindset

Most managers are reasonably good at providing their people with knowledge, skills and good processes.

The exceptional leader provides the multiplier of creating the Right Mindset - thereby creating Exceptional Performance.

The rest of the workshop was about how to create the right mindset in your team - through a combination of rational and emotional drivers around:

• Setting direction (Vision, Strategy, Reality)
• Engaging and exciting your team (which often is the most important missing ingredient)
• Executing
• Sustaining Momentum.

I have learnt a lot today and am grateful for the opportunity to grow as a leader.

I was curious to check out the rogenSi website tonight.  Again - I was  impressed with their Values (rogenSi DNA Page ) - which I have copied below:

VALUES

Our values direct our energy, our expertise and our choices.

Honour Clients
    • Know their world
    • Anticipate
    • Work magic
    • Challenge boundaries
    • Own the result

Create Buzz
    • Energise
    • Play
    • Create
    • Inspire
    • Celebrate

Be Courageous
    • Talk straight
    • Embrace feedback
    • Break with convention
    • Be bold – take risks
    • Follow your instincts

They certainly delivered to their values today - Well Done and real inspiration!

Australian Business - Opportunities for improvement

The Australian Financial Review publishes a business magazine on the weekends called "BOSS".  It ranges from good to mediocre - the latter when the editor has had a bad month and fills it full of reprints from the Harvard Business Review or the Guardian.

The edition on the 10th March 2010 was very good.  I was particularly struck by a review on page 23 of the strengths and weaknesses of Australian business - which drew on some research funded by the Australian government and published in a report called "Management Matters in Australia" released by the Australian Government in late 2009:

Where Australian Management is strong:

• International Outlook
• Team Leadership
• Risk aversion
• Strong operational management skills

Where Australian Management is not strong:

• People practices - attracting, developing and retaining employees
• Measuring and improving management practices
• Over rating management performance
• Centralised thinking and reluctance to foster autonomy of operations
• Investment in management training and education
• Fostering innovation.

I think this is absolutely correct.  Australia is very lucky at the moment that we have lots of things that North Asia (in particular) needs - especially natural gas and mineral commodities.  So we are enjoying a fantastic standard of living selling our wares and buying some time.  We are in danger of becoming complacent about the need to build strategic sustainable advantage - and in particular the need to invest in our people skills and the quality of the people in our business enterprises.

Training for sustainable competitive advantage

I once worked in a bank where the CEO decided to shut down the training division. He was chasing short term cost advantages (and got them) and his view was that the  leadership of the bank should provide the training.   I remember once when - after spending a lot of money on developing a new system to better manage customer files and records - he decreed that the line managers would train the staff in implementation.  So instead of spending time building market share and helping my team win new business and retain customers, I spent three weeks showing staff which buttons to click on a screen (after I had learned the system myself through trial and error).  In effect - for the time I worked there - the only training I was able to provide for my staff was that which I implemented by scratching budget in from other areas and doing some ad hoc training through external providers - or by piggy backing my staff onto a little bit of training that was being done by another division in the bank.

Really what was happening was that we were mining the experience of the longer serving staff (who had been properly trained) without replenishing the organisation's talent pool.

Needless to say, the bank found it could not retain young talent and a huge part of the line managements activity was in recruiting new staff to replace those who had left to join another organisation.  End game?  The bank was taken over by another bank not long after I also moved on.

This research by McKinsey is really interesting reading.  Organisations that will build competitive advantage are those whose senior managers are critically supportive of both technical and soft skills training.

McKinsey Survey on Building Organisational Capabilities March 2010


So - don't skimp on training your people. It is probably the biggest thing you can do to build sustainable competitive advantage.

Bhutan - getting ready

I love to go trekking - and like to be always planning my next adventure.  Having pored over maps and atlases since childhood - I have always been fascinated by the Himalaya region and Tibet.  This could be because I was born in Darjeeling to Christian missionary parents - but I don't have any conscious memory - so it must be subconscious linkage (collective unconsciousness and all that Mr Jung!).

I have decided that I would like to visit Bhutan - and then - when I can - the areas around Mustang on the Tibetan border with India.

In the months before I go on the next trek - I like to read as much as I can about the people and the place I am going to.  So I bought some books on Bhutan.  I have just finished reading Jamie Zeppa's "Beyond The Sky and the Earth".  Such powerful and honest writing - about a Canadian Masters graduate in English who goes to teach in Bhutan - and how it transformed her life.  It is a gritty, honest and beautiful read - and has sharpened my desire to go and see this Buddhist mountain kingdom.

Zeppa learns to understand how a culture based around material possession provides no lasting happiness, happiness is within.  Happiness  is driven by how we think.

I thoroughly recommend this book.